Investing.com - The Australian dollar has surged to a three-week high of US64.10¢. This leap is largely attributed to market interpretations of comments made by Federal Reserve Chairman Jerome Powell, which suggested that interest rates may have reached their peak. This interpretation has fueled an increased appetite for risk assets.
At its recent policy meeting, the Federal Reserve made the anticipated decision to maintain interest rates within the 5.25% to 5.50% range, a position they've held since July.
Despite Powell's claim that the Federal Open Market Committee is neither considering nor discussing rate cuts, investors interpreted the overall message as a balanced stance on policy. This interpretation has led to doubts about further rate increases.
The reaction to the Fed's decision was also reflected in the U.S. Treasury bond market, where yields fell as traders slightly reduced the chances of a rate increase while boosting the likelihood of rate cuts.
Meanwhile, in Australia, money markets are holding steady with a two-thirds probability of a hike in the Reserve Bank's cash rate to 4.35% next week, a prediction unchanged from Tuesday.